Yeoman’s Row Management Ltd V Cobbe [2008] Ukhl 55

Case summary:

Mrs. Lisle-Mainwaring in 1983 acquired a long leasehold interest in a flat in the property in question (which originally had thirteen flats) and later two other adjacent flats, which were then physically combined into one unit and lived there with her husband (who died recently). In 1986, Mr. And Mrs. Lisle-Mainwaring who are also the directors of appellant company Yeoman’s Row Management Ltd, decided to purchase the property as they recognized its development potential and used the appellant company as a vehicle to purchase the property. The property was transferred to the appellant company in April 1998 subject to long lease to tenancies of other flats by Mrs. Lisle-Mainwaring, five of which were held on Rent Act protected tenancies.

The respondent Mr. Cobbe is an experienced property developer, with whom the appellant company began negotiation about the property development in February 2001. Mrs. Lisle-Mainwaring played a leading role in the negotiations with the appellant company. An oral agreement ‘in principle’ reached between her and Mr. Cobbe by the end of 2002, which replaced an earlier oral agreement in principle reached by them. Hence this agreement is referred as ‘second agreement’, according to which, Mr. Cobbe would apply for planning permission on his own expenses to demolish the existing block of flats and in its place erect a terrace of six houses; On obtaining the grant of planning permission and vacant possession, for an upfront payment of £12 million to the appellant, the property would be sold to Mr. Cobbe or to a company nominated by him; The property would be developed in accordance with the planning permission by Mr. Cobbe or the company nominated by him; Mr. Cobbe would sell the six houses and pay the appellant 50 per cent of the amount by which the gross sales proceeds that exceeded £24 million.

Mr. Cobbe applied for the planning permission, which was granted on 5 April 2004, but the Council resolution approving...